California Assembly Bill 5 (AB5) was a bill signed into law on September 18, 2019, and went into effect on January 1, 2020. The bill aimed to classify many independent contractors in California as employees, thereby granting them additional labor rights and benefits. The bill was primarily targeted at gig economy companies, such as ride-sharing companies like Uber and Lyft, but also impacted many other industries, including trucking.
Under AB5, many trucking companies in California were required to reclassify their independent contractors as employees, which can result in additional costs for the company. The bill codified a three-part test, called the ABC test, which requires companies to prove that workers are free from company control, performing work outside of the company’s usual business, and operating an independently established trade or business. This test can make it difficult for many trucking companies to continue to classify their workers as independent contractors.
After the passage of AB5, there was significant controversy and pushback from the trucking industry, with many arguing that the law would have negative consequences for the industry and make it more difficult for companies to operate. In 2020, a federal court temporarily blocked enforcement of the law on the trucking industry, but the issue remains unresolved and continues to be a source of debate and controversy in California.